Analysis: State of emergency?

On the economic front, as of May 6, net liquid foreign exchange reserves with the State Bank of Pakistan (SBP) stand at $10.3 billion less $4 billion worth of gold and SBP hardly has enough dollars to cover just one month of imports.

There's been a bloodbath at the Pakistan Stock Exchange where the loss in capitalisation has amounted to Rs900 billion or a colossal $4.5 billion. Plus, the rupee has lost Rs17 against the dollar in a month.

The PTI is spreading a 'civil war' narrative, bent upon delegitimising all state institutions and undermining the administrative capacity of the state. On the political front, there's chaos, disorder, confusion and commotion. Imagine a serious political chaos amidst an even more serious economic meltdown. A catastrophe in the making? A catastrophe of our own making.

Three things are yet to happen: the price of diesel is yet to reach Rs250 a litre; SBP’s policy rate is yet to rise to 15 percent; and the rupee is yet to fall another Rs10 against the dollar. Withdrawing the subsidy on diesel -- and raising the price of diesel to Rs250 a litre is an extremely difficult political decision. My feeling is that Prime Minister Shehbaz Sharif has the capacity to take difficult decisions but the prime minister is not ready to take difficult decisions without the full support of other stakeholders, including the establishment.

To be certain, elections do not have any answer to our momentous economic dilemmas. To begin with, elections mean that the PMLN-led government is not prepared to take difficult decisions and if the PMLN comes back a winner, the party would still have to take the same difficult decisions. 

Secondly, under the law, an interim government has to precede an election but the IMF, as a matter of principle, does not deal with an interim government (unless there’s complete political consensus behind that interim government). If the IMF is not willing to deal with an interim government, then a default becomes a real possibility even before an election. 

Thirdly, the Election Commission of Pakistan (ECP) is not ready for election. Plus, Imran Khan will not accept election results under the current ECP.

Back in 2018, Imran Khan’s strength rested on four pillars: he was backed by the establishment, powered by deep-pocketed ATMs, untested and loved by the media. In 2022, he stands fully tested plus he has lost his deep-pocketed ATMs while both the media and the establishment have gone 'neutral'. To be certain, he still has no team to manage the economy.

Red alert: Pakistan is going through an internal political realignment plus an external geopolitical realignment. To be sure, PTI's narrative of a 'civil war' and the narrative of a 'better economy' cannot coexist; one of the two has to be buried several feet under the ground. Does the government need to declare a state of emergency? A state of emergency is a "situation in which a government is empowered to be able to put through policies that it would normally not be permitted to do, for the safety and protection of its citizens”.